How GST works in India
Goods and Services Tax (GST) is a destination-based, multi-stage tax introduced on 1 July 2017. It replaced more than a dozen central and state levies — VAT, service tax, excise duty, CST, and others — into a single framework.
The dual structure means every transaction is taxed by both the Centre and the State:
- Intra-state supply (same state): CGST (Centre) + SGST (State) — each at half the slab rate.
- Inter-state supply (different states): IGST (Integrated GST, collected by Centre and apportioned to destination state).
The total tax percentage is the same in both cases — the split just determines who collects it.
GST slabs at a glance
| Slab | Typical items |
|---|---|
| 0% | Fresh produce, milk, bread, books, healthcare services |
| 5% | Packaged food, edible oil, rail/economy air travel, life-saving drugs |
| 12% | Processed foods, business-class air travel, construction services |
| 18% | Most goods and services — software, professional services, electronics, restaurants |
| 28% | Luxury and sin: cars, motorcycles, tobacco, aerated drinks, casinos |
Some items also attract a Compensation Cess on top of the 28% slab (e.g., cars, pan masala). This calculator computes the base GST only — not cess.
Exclusive vs inclusive: how invoicing works
Most B2B invoices are exclusive — the base price is quoted and GST is added on top. This is standard because registered buyers can claim Input Tax Credit on the GST paid.
Exclusive (base = ₹10,000, 18% GST):
- GST = ₹10,000 × 18% = ₹1,800
- Invoice total = ₹11,800
Inclusive (quoted price = ₹11,800 already includes GST):
- Net = ₹11,800 × 100 / 118 = ₹10,000
- GST baked in = ₹1,800
MRP labels on packaged goods are almost always inclusive — the consumer price includes GST.
CGST + SGST vs IGST on an invoice
A Delhi business supplying to another Delhi business charges CGST 9% + SGST 9% (two line items).
The same Delhi business supplying to a Mumbai business charges IGST 18% (one line item). The Centre later transfers the state share to Maharashtra.
If you’re filing GSTR-3B, you report CGST/SGST and IGST in separate columns — this calculator does the split automatically.
Next steps
- GST Input Tax Credit Calculator — compute net GST payable after offsetting ITC per §49A/49B utilization rules
- GST Late Fee Calculator — calculate penalties if you filed GSTR-3B, GSTR-1, or GSTR-9 after the due date